Investigating the role of management accounting mediation on the relationship between cost system design and firm performance using structural covariance equations

Subject Areas : Management Accounting

Hadi Saeidi ¹ , Nazgol Tatari ² , Shaban Mohammadi ³

1 - Assistant Professor of Accounting, Shirvan Branch, Islamic Azad University, Shirvan, Iran
2 - Graduate Student of Accounting, Shirvan Branch, Islamic Azad University, Shirvan, Iran.
3 - MSc. Department of Accounting- Hakim Nezami institution of higher education at Quchan , Iran

Received: 2018-06-13 Accepted : 2018-09-16 Published : 2019-06-22

Keywords: management accounting, Cost System Design, Firm Performance,

Abstract :

The purpose of this study was to investigate the intermediary effect of management accounting methods on the relationship between cost system design and Firm performance. Among the companies admitted to the Tehran Stock Exchange from 2013 to 2016, a random sample of 225 non-financial companies was sent to the questionnaire, 203 of which participated in the survey (90% response rate). After the initial processing, 161 data were used as an example for analysis. In this study, a covariance-based structural equation model was used to examine the relationships between variables. Linearity between variables was also analyzed using its regression analysis OLS done. Cronbach's alpha test was used to test reliability, which is due to the higher Cronbach's alpha of 0.7. Confirmatory factor analysis was used to fit the fittest questionnaire. Results show that there is a meaningful positive relationship between cost design design and management accounting method. There is a significant positive relationship between management accounting and corporate governance practices. Management accounting methods have a mediating role on the relationship between cost system design and Firm performance.

References:

*      Abdel-Kader, M., & Luther, R. (2008). The impact of firm characteristics on management accounting practices: A UK-based empirical analysis. The British Accounting Review, 40, 2–27.

*      Al-Omiri,M., & Drury, C. (2007).Asurveyof factors influencing the choice of product costing systems in UK organizations. Management Accounting Research, 18(4), 399–424.

*      Bai, G., & Krishnan, R. (2012). Role ofmanagement accounting systems in the development and efficacy of transactive memory systems. Journal of Management Accounting Research, 24(1), 201–220.

*      Banker, R. D., Bardhan, I. R., & Chen, T. (2008). The role of manufacturing practices in mediating the impact of activity-based costing on plant performance. Accounting,Organizations and Society, 33(1), 1–19.

*      Baron, R.M., & Kenny, D. A. (1986). Themoderator–mediator variable distinction in social psychological research: Conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 6, 1173–1182.

*      Cagwin, D., & Bouwman, M. J. (2002). The association between activity-based costing and improvement in financial performance. Management Accounting Research, 13(1), 1–39.

*      Chong, V. K., & Eggleton, I. R. C. (2003). The decision-facilitating role of management accounting systems on managerial performance: the influence of locus of control and task uncertainty. Advances in Accounting, 20(3), 165–197.

*      Deshpande, R., Farley, J. U., & Webster, F. E. (1993). Corporate culture, customer orientation, and innovativeness in Japanese firms: A quadrad analysis. Journal of Marketing, 57, 23–37.

*      Efron, B. (1979). Bootstrap methods: Another look at jackknife. The Annals of Statistics, 7(1), 1–26.

*      Field, A. (2009). Discovering statistics using SPSS. Sage Publications.

*      Frezatti, F., Aguiar, A. B., Guerreiro, R., & Gouvea, M. A. (2011). Does management accounting play role in planning process? Journal of Business Research, 64, 242–249.

*      Gerdin, J. (2005). The impact of departmental interdependencies and management accounting system use on subunit performance. European Accounting Review, 14(2), 297–327.

*      Hair, J. F., Anderson, R. E., Tatham, R. L., & Black, W. C. (2010). Multivariate data analysis with readings (7th ed.). Englewood Cliffs, NJ: Prentice Hall.

*      Henri, J. F., Boiral, O., & Roy, M. J. (2016). Strategic cost management and performance: The case of environmental costs. The British Accounting Review, 48(2), 269–282.

*      Keskin, H. (2005). The relationships between explicit and tacit oriented KM strategy, and firm performance. Journal of American Academy of Business, 17(1), 169–176.

*      Lachmann, M., Knauer, T., & Trapp, R. (2013). Strategicmanagement accounting practices in hospitals: Empirical evidence on their dissemination under competitive market environments. Journal of Accounting & Organizational Change, 9(3), 336–369. 

*      Lavia López, O., & Hiebl, M. R. (2014). Management accounting in small and mediumsized enterprises: Current knowledge and avenues for further research. Journal of Management Accounting Research, 27(1), 81–119.

*      Lee, J.Y. (2003). Cost system research perspectives, in (Ed.) Advances in Management Accounting, 11, 39–57.

*      Macinati, M. S., & Pessina, E. A. (2014). Management accounting use and financial performance in public health-care organisations: Evidence from the Italian National Health Service. Health Policy, 117(1), 98–111.

*      Maiga, A. S., Nilsson, A., & Jacobs, F. A. (2014). Assessing the interaction effect of cost control systems and information technology integration on manufacturing plant financial performance. The British Accounting Review, 46, 77–90.

*      Malmi, T. (1999). Activity-based costing diffusion across organizations: an exploratory empirical analysis of Finnish firms. Accounting, Organizations and Society, 24(8), 649–672.

*      Mardia, K., V. (1985). Mardia's test of multinormality. Encyclopedia of statistical sciences.

*      Mohamed, A. A., & Jones, T. (2014). Relationship between strategic management accounting techniques and profitability-a proposed model. Measuring Business Excellence, 18(3), 1–22.

*      Pavlatos, O., & Kostakis, H. (2015). Management accounting practices before and during economic crisis: Evidence from Greece. Advances in Accounting, Incorporating Advances in International Accounting, 31(1), 150–164.

*      Pavlatos, O., & Paggios, I. (2009). A survey of factors influencing the cost system design in hotels. International Journal of Hospitality Management, 28, 263–271.

*      Pizzini, M. J. (2006). The relation between cost-system design, managers' evaluations of the relevance and usefulness of cost data, and financial performance: an empirical study of US hospitals. Accounting, Organizations and Society, 31(2), 179–210.

*      Podsakoff, P. M., & Organ, D.W. (1986). Self-reports in organizational research: Problems and prospects. Journal of Management, 12(4), 531–544.

*      Satorra, A., & Bentler, P. M. (1994). Corrections to test statistics and standard errors in covariance structure analysis. In A. von Eye, & C. C. Clogg (Eds.), Latent variables analysis: applications for developmental research (pp. 399–419). Thousand Oaks, CA: Sage.

*      Soobaroyen, T., & Poorundersing, B. (2008). The effectiveness of management accounting systems: Evidence from functional managers in a developing country. Managerial Auditing Journal, 23(2), 187–219.

*      Uyar,A., Kuzey,C.(2016). Does management accounting mediate the relationship between cost system design and performance? Advances in Accounting, incorporating Advances in International Accounting, Advances in Accounting,35(1), 170-176

*      Walker, K. B., Fleischman, G. M., & Johnson, A. (2012). Measuring management accounting service quality. Management Accounting Quarterly, 13(3), 15–27.